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evaluate the liquidity and financial ratios of both companies (NIKE & ADIDAS); using the financial ratio calculations you make, you will identify the strengths and weakness of each firm. analyze the...

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evaluate the liquidity and financial ratios of both companies (NIKE & ADIDAS); using the financial ratio calculations you make, you will identify the strengths and weakness of each firm.
analyze the activity, financial leverage, liquidity, profitability, and market ratios for each company you are researching for your final project. Conclude your paper by discussing each firm’s strengths and weaknesses.
Evaluation of the Firms
C. Evaluate both companies’ liquidity. Cite specific examples and figures that support your evaluation.
D. Calculate both companies’ financial ratios:
1. Activity ratios, including inventory turnover ratios
2. Debt ratios (financial leverage)
3. Profitability and market ratios
E. Using the financial ratio calculations above, identify strengths and weaknesses for each firm, citing specific examples and figures to support your response



Answered Same Day Mar 24, 2020

Solution

Ashish answered on Mar 26 2020
141 Votes
Running Head: Financial Analysis of Nike and Adidas
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Liquidity Ratio
The liquidity ratio helpful in determine the company ability for meeting there short term obligations also provide the status of company financial health (Richard L., 2002).
Cu
ent Ratio = Cu
ent Assets / Cu
ent Liabilities
Cu
ent Ratio (Nike 2016) = $15,025 / $5,358
Cu
ent Ratio (Nike 2016) = 2.80
Cu
ent Ratio (Adidas 2016) = $8,886 / $6,765
Cu
ent Ratio (Adidas 2016) = 1.31
Acid Test Ratio = Quick Assets ÷ Cu
ent Liabilities
Acid Test Ratio (Nike 2016) = ($15,025-$4,838 - $1,489) / $5,358
Acid Test Ratio (Nike 2016) = 1.62
Acid Test Ratio (Adidas 2016) = ($15,025-$3,763) / $6,765
Acid Test Ratio (Adidas 2016) = 1.66
Net Working Capital = Cu
ent Assets - Cu
ent Liabilities
Net Working Capital (Nike 2016) = $15,025 - $5,358
Net Working Capital (Nike 2016) = $9,667
Net Working Capital (Adidas 2016) = $8,886 - $6,765
Net Working Capital (Adidas 2016) = $2,121
Activity ratios
This ratio helpful in the measurement of firm sales per another sales account, the assets account used for calculation is accounts receivable and inventory.
Receivable Turnover = Net Credit Sales ÷ Average Accounts Receivable
Receivable Turnover (Nike 2016) = $32,376/ (($3,241+$3,358)/2)
Receivable Turnover (Nike 2016) = 9.81
Receivable Turnover (Adidas 2016) =...
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